SOL on old Student Loans

[gamtam]

I have 2 Student Loans that went into delinquency in 12/85.

I had spoken to an attorney about BK Chapter 7 because I could not pay these loans back at the time. I never made any payments on them and they were my only debts at the time. The Attorney told me there was no reason for a BK because the SL's were past the SOL for California.

Now, after all these years a CA is contacting me about settlement of these old loans.

What are my options here?

How were these loans SOL's back in 1985? Eather way, I believe the SOL in California is a max of 4 years.

Any help is great.

Thanks

[Recovering Attorney]

Student loans are non-dischargeable in bankruptcy. And the ability of the guarantor or fed gov't to recover a student loan is incredibly broad. But there are programs to help you pay this off without a lot of drama. So don't ignore the CA, find out who holds your loans, and try to wrok with them. You can get more info on teh US DOE site

[LynnInMN]

Until the late 90's you could file on a student loan provide that 7 (or 5)years had passed from the time the loan became due. The law was changed I think in 1998 making all student loans non dischargeable. There is no SOL on student loans.

[missinglink]

There are student loans that are discharged in bankruptsy in New York State. They will not tell you this. The only way I found this out was by New York State Higher Education Service sending me a letter. Because I got 3 months behind on my loan. I had to get caugh up or have my State tax check seized, unless I had a good reason for not paying and one of them was discharging the loan in bankruptsy. Not everybody can do it.

They seem to know in advance who is eligible.

I managed to get caugh up on my student loan payments.

[LynnInMN]

There are student loans that are discharged in bankruptsy in New York State. They will not tell you this. The only way I found this out was by New York State Higher Education Service sending me a letter. Because I got 3 months behind on my loan. I had to get caugh up or have my State tax check seized, unless I had a good reason for not paying and one of them was discharging the loan in bankruptsy. Not everybody can do it.

They seem to know in advance who is eligible.

I managed to get caugh up on my student loan payments.

Not true. There are no special rules in NY or any other state. I think you misinterpreting what was being said in the letter. The only way that a student loan can be discharged is to have a special hearing during a bankruptcy filing. It is only under extreme circumstances that the courts will allow them to be discharged. The guarantee agency does not know who in advance is eligible. Your loan must have been included in bankruptcy pre 1989.

[missinglink]

Bankruptcy

Effective October 8, 1998, your obligation to repay Title IV, HEA student loan and grant liabilities can no longer be canceled (discharged) due to bankruptcy, unless you can successfully prove that repayment of the debt would cause "undue hardship" as defined by case law in your jurisdiction. Previously, student loan and grant liabilities could only be canceled (discharged) due to bankruptcy under certain conditions which, in general, depended on the amount of time between the date on which a loan or grant liability has been due or the date that the bankruptcy was filed, as well as undue hardship.

Effective May 28, 1991 and prior to October 8, 1998, a loan or grant liability was discharged by entry of a general discharge order if the first payment came due on the debt at least 7 years before the bankruptcy was filed. Prior to 1991 amendments, only five years was required. Any grace periods, forbearance, or deferment must be subtracted from the time elapsed between the first payment due date and the filing date when calculating time in repayment. Debts outstanding for less than the required seven year period could be discharged only if the court made an express finding that the repayment of the debt would place an "undue hardship" on the borrower. These non-dischargeability requirements apply to educational loans received by both student borrowers and by parent borrowers (PLUS Loans), and apply to loans received by any kind of borrower to pay off prior loans (Consolidation Loans). Dischargeability of these types of debts is governed by 11 U.S.C. 523 (a)(8). In order to determine the dischargeability of a loan, the servicing agency needs the following three pieces of information from you or your attorney:

Notice of First Meeting of Creditors;

List of Creditors (Schedule A-3); and

the Final Discharge Order

Please call us 1-800-621-3115 for additional information...

Yes it does say that in my letter.

[LynnInMN]

In order to determine the dischargeability of a loan, the servicing agency needs the following three pieces of information from you or your attorney:

Notice of First Meeting of Creditors;

List of Creditors (Schedule A-3); and

the Final Discharge Order

Please call us 1-800-621-3115 for additional information...

Yes it does say that in my letter.

That still doesnt mean that loans are currently dischargeable. You would have had to have filed BK prior to 1989 and met the certain conditions being either the 5 or 7 year rule. A lot of loans are still floating around out there that were discharged by BK prior to 1989 but the servicing agency didnt get the information!

[credithelp]

Nowadays a student loan can haunt you forever unless a deal has been made or you pay them off. The good news is that they are usually more willing to work with you than your typical creditor. A friend of mine owed alot on his school loan and he couldnt pay it(40k). They agreed to an extremely low monthly payment for two years to avoid a default(something like $25). After that his payments went back up to the full amount.